Web2Summit: eBay Services We'd Like to See

Tim’s earlier post covered a lot of the highlights from his on- and off-stage conversations with eBay CEO Meg Whitman. But he didn’t touch on one of the most interesting themes of their interview: whether eBay/PayPal’s powerful knowledge about who you are—which they use to prevent fraud—could also be the basis for authenticating social network relationships.

Over and over, Summit speakers have talked about the growing desire and need for social software that recognizes your existing online networks. Could PayPal offer a service that would help bridge this gap? “Potentially,” said Whitman. “We’ve thought a lot about this, and there are interesting long-term possibilities.” Even if there isn’t an imminent product, such a service would be a terrific turn on the “data is the Intel inside” idea.

Along similar lines, when Whitman mentioned that fraud modeling techniques are a core competence of eBay’s, Tim suggested that they offer fraud protection as a service. Of course, fraud protection may be a big competitive advantage for the company at the moment. But as the Web tends to decentralize advantageous conditions, it will be interesting to see whether eBay builds on their own success with PayPal’s merchant services and translates their fraud prevention knowledge into a business of its own.

That one made me do a double take. There’s quite a bit of fraud on eBay, and since seller’s pay eBay’s fees, their system is much more favorable to sellers than to buyers. There’s no core competence or system there at all, and anyone who uses eBay frequently knows it.

Perhaps she refers to PayPal doing something credit-card wise around fraud, but that is not all that proprietary or revolutionary. Lots of credit card fraud services out there.

Cheers,

BW

http://radar.oreilly.com Sarah Milstein

During the interview, Whitman said that 1/100th of 1% of transactions on eBay involve fraud. That may be a low percentage, but as Tim noted, their transaction volume is great enough that the absolute number is still high. And I’ll add that the fraud gets a lot of attention–probably a disproportionate amount. So there’s certainly the sense that fraud is very common. (Btw, I’ve been a regular eBay buyer for years, so my comments include that perspective.)

But at the rate fraud occurs now, eBay is better than usable–on nearly all transactions, you can trust you’ll have a fair, legal exchange. Without being a cheerleader for eBay, I believe that’s because they do a fair amount to ferret out fraud–things like devising algorithms to systematically determine when two or more users are banding together to deceive others. They don’t catch everything, of course. But they’ve been working for years on a truly hard problem, and most of their success on this front is invisible to us.

Put another way, if eBay truly did nothing, or not enough, the system would collapse.

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